It’s that time of year again already…
The markets wind-down, the big players jet off to sunnier climes (or to their Alpine retreats) and we’re left with what can be treacherous trading conditions.
So will you be taking a well earned break over Christmas?
The final call is yours. But I do recommend to my students that we stand aside, enjoy the festive fun, and come back to trading fully invigorated and ready for action in January.
The trouble is, with much of the liquidity absent over the holidays the markets can be left exposed to nasty jolts of volatility.
Is it underhand tactics by those who’ve got the weight behind them to move the markets around?
Are they deliberately manipulating price?
Or is it just the fact that the usual big dogs are not on patrol to keep the markets contained in a more orderly fashion?
The jury’s out on that one but don’t be surprised to see the markets move in unusual ways.
But just because you’re not actively trading doesn’t mean you should switch off completely!
The Christmas break is a great opportunity to take stock of where you currently stand and start preparing yourself for 2018.
Here are 5 ways you can improve your trading over the Christmas holidays:
It is the obvious one, but while the markets are quiet why not cross a title or two off your trading reading list? It doesn’t have to a dry and technical ‘how to’ manual either. There are some great financial story tellers you can learn from too. Michael Lewis’s Flash Boys is all about the rise of ‘black-box’ high frequency trading (here’s a link to it on Amazon – click here). Lewis rarely lets you down when it comes to riveting insights of what’s been going on behind the scenes in ‘big’ finance. It’s all good food for thought.
2) Review your performance
So how was your year? Did you do as well as you hoped in 2017? Did you do even better? Now’s a great time to go back through your trading journal or your record of trades, and look for any recurring patterns. Do you notice any patterns of strength? Any trading opportunities you can capitalise on in future?
You might notice chart patterns you seem able to ‘sync’ with effortlessly. Or a particular time-duration of trades that seems to work well for you. And on the other side of the equation how about filtering out any weaknesses too?
Are there particular set-ups you just don’t seem to get on with? Or can you see that you seem to struggle with managing longer term trades and the extra patience they require? Taking a periodic retrospective review can help you uncover some surprising insights into your own performance and give you pointers you can use to instantly improve it.
3) Backtesting new ideas
Did you have a lightning-bolt idea for a new strategy that you’ve never got round to testing. Or how about those new methods and approaches you’ve been reading about but just not looked at seriously yet?
Keep a note of your ideas and intentions in a notebook and you’ll always have a new backtesting project to work on when the markets are off limits. Some would say this is where the real ‘work’ of trading is actually done. All the effort goes into developing the strategy or approach leaving you the eventual easy task of rolling it out live.
4) Set yourself a ‘KPI’ for 2018
Is there a particular aspect of trading you’ve been struggling with? If you know you’ve been lacking in a certain area here’s a good way to measure, hold yourself accountable, and aim for an uplift in your performance: Select a simple key performance indicator (KPI) for the first quarter of 2018 (it’s best to do them over shorter periods of time – a kind of step-at-a-time approach) and be ready to grade yourself on how well you did come the end of March.
The important thing is to make sure there is a clearly quantifiable element to your KPI: ‘I will enter at least 95% of the valid signals my strategy generates’ or ‘I will have placed at least 30 trades on my micro-account as an experience building exercise’ are examples of simple, measurable performance indicators. You don’t need to aim for the stars, just go for the next small logical step you can identify on your journey to consistent trading.
5) Graduate at the TradersNest.com trading school
If you’re at an early stage in your trading adventures, or if you’d just like a refresher course on what I’m sure are the crucial components of a smooth running trading campaign, head on over to TradersNest.com – and work through the ‘Trading School’ training course I’ve uploaded for you.
It’s 100% free and you just need to register for a free membership to access all the content. You can also pop into the forum and say ‘hi’ while you’re there if you like! Click here to go to the sign-up page.
I’ll send out your next Trader’s Nest email after the festive break so it just leaves me to wish you a very Merry Christmas and a happy and prosperous 2018!